The economics and politics of instability, empire, and energy, with a focus on Latin America and the Caribbean, plus other random blather and my wonderful wonderful wife. And I’d like a cigar right now.

October 09, 2014

Devo Max 1.0, circa 1914

This is a bit of a shaggy dog post about Ireland a century-ago and Scotland today, but I want to put it up anyway.

In 1914, the British government finally passed a Home Rule bill for Ireland. Unfortunately, World War I intervened and London never fully implemented the law. That helped fuel the Easter Rising of 1916. Britain and Ireland still might have remained united even with London’s botched response to the revolt but for the government’s misbegotten decision to extend conscription to Ireland in 1918. My understanding of Irish political history is limited, but finally put paid to the possibility of a peacefully united British Isles seems to have been the combined one-two-three-four punch of (1) suspend Home Rule; (2) put down the Rising with brutal force; (3) shoot the leaders of the rebellion; and (4) finally try to draft the Irish who had in fact already volunteered in large numbers .

How many Irish volunteered during the war? We know that 140,456 enlisted in the armed services over the course of the conflict. Of those, 55% gave their religion as Catholic, according to Keith Jeffrey in Ireland and the Great War. That would come to a little under 15% of the 1911 Catholic male population aged 15-35. To that one should add the rough 58,000 Irishmen who were already serving the armed forces in 1914, but religious figures for them are hard to come by. A random guess of half would place the number of military-age Catholic men in the war at 20%.

That is not small. It is twice the percentage of military-age male Americans who served during the Vietnam War, and that war involved conscription and a far far lower risk of death. In fact, less than half of all military personnel actually went to SE Asia in 1965-73.

Anyway, to the point: many have argued that had Home Rule been implemented, then Ireland would still be part of the U.K. today. Which makes it surprising that the actual text of the act is so hard to track down! But I finally did. So what were the provisions of the Home Rule act and does it provide a model for Scotland?

Irish Home Rule, circa 1914:

Trade: Ireland would be part of the United Kingdom for commercial and customs purposes.

The West Lothian question: Home rule cut the number of Irish MPs from 103 to 42. That cut Ireland from being overrepresented (15% of seats against 10% of population) to underrepresented (6% of seats), but those MPs still had full voting privileges. Nothing EVEL here.

Tax collection: U.K. bureaucrats would continue to collect and administer all taxes. The funds collected in Ireland would then be remitted to the Irish parliament. This would save autonomous Ireland from the need to set up an internal revenue service.

Courts: The Privy council would remain the chief court of appeal, but it would now be the only court of appeal. In this, Ireland would become like the nominally-independent countries of the modern West Indies.

Services: The bill kept the U.K. in charge of the following: old age pensions, national insurance, post office banks and friendly societies. (But not the actual post office, which would fall under Irish control from the start.) The Irish parliament could take the reserved services over whenever it wanted with a one-year warning. The Royal Constabulary would move to Irish control after six years, although local police, prisons and courts would come under Dublin immediately.

Infrastructure: One service, however, would never be devolved: road-building. Under Article 19, Irish petrol taxes and car license fees would continue to go into the all-U.K. fund and Irish projects would be funded just as elsewhere under the Development and Roads Improvement Fund Act of 1909. The thing is, in practice the Road Fund simply returned car taxes to the county where they were collected. In other words, not a hidden subsidy.

Finance: This part got complicated. Basically, under Home Rule the imperial government (that is the phrase used in the act) would pay Ireland the cost of all Irish services as of 1912 plus £500,000. (Measured as a % of the British GDP, that would be the 2013 equivalent of £340 million.) The surplus was then slated to fall to £200,000 within six years. The Irish government could vary tax rates or impose new ones; if it cut taxes, the transferred sum would fall commensurately and if it raised them it would rise. The £500,000 was in addition to the existing net transfer of £1.5 million, for an initial subsidy of £2 million.

So far, so simple. But there were a few catches. First, £2 million was a realtively small amount of money even for the time. It came to 16% of all government spending in Ireland and only 1.5% of Ireland’s nominal GDP in 1912. (From Ó Gráda, Ireland: A New Economic History.)

Second, if Irish expenses grew for any reason, then Dublin would have to finance them from new taxes or by borrowing. Increases in the revenue from existing taxes (say from economic growth) would go to London. Ireland could borrow on the markets, but that was a limited recourse and under an implicit British veto. Of course, the arrangement also provided security against a fall in revenues. The problem, really, would have been that the transferred sum was neither linked to economic growth nor inflation. It would not therefore have provided much of an automatic stabilizer for the Irish economy.

Third, the whole set-up was transitory. Article 26 stated that once all combined Irish and imperial tax revenues collected in Ireland exceeded all combined Irish and imperial expenses in Ireland over three consecutive years, then Parliament would revisit the finance question. In short, once Irish tax revenues exceeded expenses, then London would have a license to cut all subsidies. On the other hand, if revenues fell further behind expenses, then Ireland would be on its own unless Parliament acted.

Of course, Ireland would still have representation in the national parliament, so it might be able to defend (or even expand) its subsidy. Absent faith in the political influence of its representatives in London, however, the Irish parliament in Dublin would have to be nuts to take over the reserved services from the U.K.

Defense: Note that defense was not included. Ireland would pay nothing for the protection of the British army and Royal Navy.

Scottish Home Rule, circa 2014:

Under modern Home Rule, with some adjustments for scale and context, Scotland would see its current fiscal relationship swapped for a lump sum equal to the amount of current U.K. non-defense spending in Scotland plus 4%, presumably adjusted for inflation.

That is really not all that different from the current set-up, under which Scotland gets a block-grant for devolved functions set at 10.03% of English spending on those functions. The big difference is that under a Home Rule-like proposal the grant would no longer be effectively indexed to U.K.-wide economic growth ... and who would want to accept that?

In addition, a modern equivalent of the 1914 Home Rule act would cut Scottish seats in Parliament from 59 to 36. That is less than a solution to the West Lothian question. Moreover, Scotland is barely overrepresented at Westminster in 2014, whereas Ireland was massively overrepresented in 1914.

The current status of Scotland, then, looks a lot like Irish Home Rule with a more generous funding formula. Devo Max, which cuts Scotland off entirely from the U.K. fiscal regime, is rather more autonomy and not a whole lot less insurance. There are better arrangements than Devo Max (consider either American or Canadian fiscal federalism) but the Home Rule proposals of a century ago are not one of them.

Of course, nobody is saying they were! I just ran across a copy of the bill and got curious as to why the precedent never seemed to come up in the modern debate. And now I know.

Comments

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It was a reasonable deal, although I gather the details were the result of some weird internal compromises on the part of the then-ruling Liberal coalition. (I know the six-year thing on the Constabulary was an attempted sop to Ulster. Ulster wasn't taking any sops.)

In the alternate universe where WWI never happened, I *think* that eventually the British government would have stepped in and crushed the Ulster mutineers and enforced Home Rule -- though they would likely have waffled for a while, making things worse.

-- A thing that doesn't much get discussed: the conflicts of 1919-23 resulted in the cleansing of most of the South's Protestant population. There was a small but important Protestant Church of Ireland in the South -- basically, Irish Anglicans -- and they punched far above their weight in terms of economic, political and social influence. Most of them fled; many were (literally) burned out, as a wave of arson against them spread across the South. Their departure was one reason the Republic was able to indulge itself in half a century of reactionary Catholicism. Which in turn allowed postwar Ulster to say, see, /told you so/.

Anyway, the experience of contemporary Austria-Hungary with this sort of divided rule wasn't very encouraging. On the other hand, A-H was both structurally and culturally so different that it's not clear if that's all that relevant.

Canada sent no representatives to the U.K. parliament. Nor did the U.K. collect any taxes in its Canadian dominion. In fact, there were no formal fiscal transfers in either direction.

Moreover, Canada controlled its borders. Ottawa set the rules on migration (even without a formally separate citizenship) and trade. The Canadians could sign treaties with foreign nations as well.

The only bits of sovereignty left in London involved the judiciary and defense. In the former, decisions could be appealed to the Privy Council. But that is true of a lot of states today that claim formal sovereignty. In the latter, Britain carried most of the heavy lifting in return for which Canada would be automatically at war if London issued a declaration.
There was, however, a small Canadian army called the Permanent Active Militia and a navy after 1910.

In short, Canada in 1867 received independence under a binding defense commitment, whereby Canada pledged to go to war when the U.K.called but in return the U.K. agreed to pay for the lion's share of Canada's peacetime defense. (And Canada needed a lot of peacetime defending, given their southern neighbor.)

Does that help, Will? Devo Max it wasn't. It was independence, pretty much the same deal as Scotland just rejected.

Home Rule was meant to be the final answer to the constitutional problem the Liberals had been arguing over for 50 years; around the same time, the People's Budget basically launched the welfare state (and the naval arms race kicked the size of the government up a notch too).

So the last big statement of old-school classical liberalism overlaps with the launch of New Liberalism; I get the impression the new welfare state was too new to get into the debate about Ireland. Home rule was autonomy from Victorian Britain, if you like, independence is marketed as autonomy from Thatcherism, but it might also be autonomy from social democracy.

Alex, I hate to ask this, but I gotta. Inquiring minds want to know. Whaddaya think about uniting the U.K. with Canada?

Your point about Home Rule and the People's Budget is something that I hadn't considered. As I understand it, the 1912 bill kept the new social insurance institutions under Union control unless the Irish parliament requested it. That brings up two questions. (1) Would Ireland have taken back control of unemployment insurance and pensions? Speaking as an American (or Canadian) that would have been batshit crazy ... but there are many occasions where people cut off the metaphorical nose to spite the face.

(2) Why do you think that so many Scots discount the argument that retaining a unified welfare state provides needed cross-insurance? I know why Americans reject that argument. (I have friends as close as it for friends to get who reject it, despite us serving in uniform and fighting enemies and all that, even though their great state is hella poorer than the great states and one district in which I have lived and voted). I also understand why Catalans would discount the argument that cross-insurance with the rest of Spain is good, being richer than the rest of the country and all. (Even if my friend Nidia Vela, among other Catalans, wants to remain in a polity with her poorer countrymen outside Catalonia.) So why wasn't the vote in Scotland more massively against independence?